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Certificate of Deposit - Security Type

From the Collaborative Bond and Money Market Data Portal.

In the Collaborative Bond and Money Market Data Model, the Certificate of Deposit classification appears within the field Security Type which is part of the universe of Bond and Money Market Instruments.

 

Definition: A Certificate of Deposit is a short term negotiable debt instrument that promises to pay the bearer or registered owner an amount or a number of amounts in the future.
 

CDs can only be issued by institutions that have a license to take deposits.  All issuers of CDs therefore are Banks. Traditionally, the instrument is coupon bearing and matures at par (100%). However, some Certificates of Deposit programmes also allow the issuance of zero coupon and floating rate instruments. Typically the instrument is short term, up to one year, but can be longer, for example in some European domestic markets can easily be up to 2 or 3 years.   

 

As permitted by applicable securities laws, this instrument entitling the owner to one or more future cash flows, can be bought and sold to anyone. This negotiability distinguishes the instrument from a bilateral loan, where in theory you cannot sell the future cash-flows without the permission of payer.

 

The term Certificate of Deposit can mean that the instrument was issued under the legal terms and conditions of a Certificate of Deposit Programme. However, recognising an instrument as a CD within securities clearing and settlement systems, can also come about without any form of programme documentation.

 

In capital market data analysis it is therefore recommendable to look beyond the segmentation of markets by mere security type and instead focus on the actual term and structure of the instrument.  However, a distinction between CP, CD and Bills as instruments of the below 1 year money markets and Bonds, Notes and MTNs as instruments of the over 1 year bond markets seems fair.

 

Based on available data, on the 31st of March 2018, the size of the vanilla CD market in multiple currencies was the equivalent of USD367.5bn.   

 

For information on issues in Certificate of Deposit market, please use the Instrument search tool.

For information on the current size of the Certificate of Deposit market, please use the data sheet tool.

For information on the composition of the Certificate of Deposit market, please use the issuer search tool.

For information on active dealers in the Certificate of Deposit market, please use the dealer search tool.

For information on active investors in the Certificate of Deposit market, please use the fund search tool.

Wikipedia 

 



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